Safe and Sound

Wayland State Bank

Mount Pleasant, IA
5
Star Rating
Wayland State Bank is an FDIC-insured bank started in 1932 and currently headquartered in Mount Pleasant, IA. The bank has equity of $17.6 million on assets of $115.3 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 19 full-time employees in 3 offices in IA, the bank has amassed loans and leases worth $57.3 million, including real estate loans of $36.9 million. U.S. bank customers currently have $96.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Wayland State Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and affords protection for account holders during periods of economic instability for the bank. Therefore, when it comes to measuring an an institution's financial fortitude, capital is useful. When looking at safety and soundness, more capital is better.

Wayland State Bank exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, scoring 20 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Wayland State Bank's Tier 1 capital ratio was 22.01 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial headwinds.

Overall, Wayland State Bank held equity amounting to 15.30 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of troubled assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with lots of these kinds of assets could eventually be forced to use capital to absorb losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

Wayland State Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.50 percent of Wayland State Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Wayland State Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.

Wayland State Bank scored 14 out of a possible 30 on Bankrate's earnings test, below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one key measure of a bank's earnings. Wayland State Bank's most recent annualized quarterly return on equity was 6.11 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $1.1 million on total equity of $17.6 million. The bank reported an annualized return on average assets, or ROA, of 0.94 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.